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Marketing Research
Aaker, Kumar, Day
Ninth Edition
Instructors Presentation Slides

Chapter Eighteen
Hypothesis Testing:
Means and Proportions

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Hypothesis Testing For

Differences Between Means

Commonly used in experimental research

Statistical technique used is Analysis of Variance

(ANOVA)

Hypothesis Testing Criteria Depends on:

Whether the samples are obtained from different or related
populations
Whether the population is known or not known
If the population standard deviation is not known, whether they
can be assumed to be equal or not

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The Probability Values (p-value)

Approach to Hypothesis Testing
Difference between using and p-value
Hypothesis testing with a pre-specified
Researcher determines "is the probability of what has been observed less than ?"
Reject or fail to reject ho accordingly

Using the p-value:

Researcher determines "how unlikely is the result that has been observed?"
Decide whether to reject or fail to reject ho without being bound by a pre-specified
significance level

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The Probability Values (p-value)

Approach to Hypothesis Testing (Contd.)
p-value provides researcher with alternative method of testing hypothesis
without pre-specifying
p-value is the largest level of significance at which we would not reject h o
In general, the smaller the p-value, the greater the confidence in sample
findings
p-value is generally sensitive to sample size
A large sample should yield a low p-value

p-value can report the impact of the sample size on the reliability of the
results

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Hypothesis Testing about a

Single Mean Step by Step

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Hypothesis Testing About A Single Mean Example 1 - Two-tailed test

Ho: = 5000 (hypothesized value of population)
Ha: 5000 (alternative hypothesis)
n = 100
X = 4960
= 250
= 0.05
Rejection rule: if |zcalc| > z/2 then reject Ho
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Hypothesis Testing About A Single Mean Example 2

Ho: = 1000 (hypothesized value of population)
Ha: 1000 (alternative hypothesis)
n = 12
X = 1087.1
s = 191.6
= 0.01
Rejection rule: if |tcalc| > tdf, /2 then reject Ho
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Hypothesis Testing About A Single Mean Example 3

Ho: 1000 (hypothesized value of population)
Ha: > 1000 (alternative hypothesis)
n = 12
X = 1087.1
s = 191.6
= 0.05
Rejection rule: if tcalc > tdf, then reject Ho
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Confidence Intervals
Hypothesis testing and Confidence Intervals are two sides of the same coin.

( X )
t
sx

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X ts x interval estimate of

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Procedure for Testing of Two Means

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Hypothesis Testing of Proportions - Example

CEO of a company finds 87% of 225 bulbs to be defectfree
To Test the hypothesis that 95% of the bulbs are defect
free
Po
qo
p
q

= .95: hypothesized value of the proportion of defect-free bulbs

= .05: hypothesized value of the proportion of defective bulbs
= .87: sample proportion of defect-free bulbs
= .13: sample proportion of defective bulbs
Null hypothesis Ho: p = 0.95
Alternative hypothesis Ha: p 0.95
Sample size n = 225
Significance level = 0.05

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Hypothesis Testing of Proportions Example (Contd.)

Standard error =

Using Z-value for .95 as 1.96, the limits of the

acceptance region are

Therefore, Reject Null hypothesis

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Hypothesis Testing of Difference between

Proportions - Example
Competition between sales reps, John and Linda for converting
prospects to customers:
PJ = .84 Johns conversion ratio based on this sample of prospects
qJ = .16 Proportion that John failed to convert
n1 = 100 Johns prospect sample size
pL = .82 Lindas conversion ratio based on her sample of prospects
qL = .18 Proportion that Linda failed to convert
n2 = 100 Lindas prospect sample size
Null hypothesis Ho: PJ = P L
Alternative hypothesis Ha : PJ PL
Significance level = .05

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Hypothesis Testing of Difference between

Proportions Example (contd.)

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Probability Values Approach to Hypothesis Testing

Example:
Null hypothesis H0 : = 25

Alternative hypothesis Ha : 25
Sample size n = 50
Sample mean X =25.2
Standard deviation = 0.7

Standard error =
Z- statistic =
P-value = 2 X 0.0228 = 0.0456 (two-tailed test)
At = 0.05, reject null hypothesis
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Analysis of Variance
ANOVA mainly used for analysis of experimental data
Ratio of between-treatment variance and withintreatment variance
Response variable - dependent variable (Y)
Factor (s) - independent variables (X)
Treatments - different levels of factors (r1, r2, r3, )
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One - Factor Analysis of Variance

Studies the effect of 'r' treatments on one response variable
Determine whether or not there are any statistically
significant differences between the treatment means 1,
2,... R

Ho: all treatments have same effect on mean responses

H1 : At least 2 of 1, 2 ... r are different

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One - Factor Analysis of Variance (Contd.)

Between-treatment variance - Variance in the response variable for
different treatments.
Within-treatment variance - Variance in the response variable for a
given treatment.
If we can show that between variance is significantly larger than
the within variance, then we can reject the null hypothesis

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One - Factor Analysis of Variance Example

Price Level

Observations
1

Total

Sample
mean
(Xp)

39

12

10

11

50

10

44

10

40

49

35

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Overall sample mean: Xp = 8.333

Overall sample size: n = 15
No. of observations per price level,n p=5

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Price Experiment ANOVA Table

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